Midyear Outlook: Three Income Themes for Multi-Asset Investors

An improved income outlook for multi-asset investors, including higher yields, sharply contrasts with cloudy conditions at 2023’s start.

After a dismal 2022 for capital markets, the strong turnaround so far in 2023 is heartening for multi-asset investors. The MSCI World Index rose 15% year to date through June 30, shrugging off a banking sector crisis and a tense US debt-ceiling standoff along the way.

We’ve seen a sharp reversal of fortune for many of the worst-hit asset classes from 2022, with growth-orientated technology stocks being especially strong, thanks to fervent interest in the potential of artificial intelligence (Display).

2022’s Laggards Have Been 2023’s Leaders

The more agreeable landscape has been a welcome sight for investors, including those focused on income. Much higher bond yields have created one of the most attractive and expansive income-generating markets in years, even among the highest-quality issuers—a relatively rare occurrence.

With this backdrop in mind, we think multi-asset investors should consider three broad income themes as the year plays out.